Here are the winners and losers of the global financial markets in Q1

Arguably the big story of the quarter was the rally in the US dollar. The US Dollar Index (DXY), which is a weighted-average performance of the dollar against multiple foreign currencies, surged 9% during the period. That means that the performance of a market in its local currency was very different from its performance if you considered it in dollar terms.

For example, the Portuguese stock market surged by over 20% in the first quarter (see above) for Portuguese investors. But because the US dollar surged against the euro — Portugal’s local currency — the returns in dollar terms were much more modest, up by around 10% (see below).

Deutsche Bank’s Jim Reid offers a snapshot of the winners and losers of the global financial markets. Here’s his narrative on how the dollar impacted returns:

The main effect of looking at Q1 returns in US dollars (Figure 4) is to shift down EUR asset performance as EUR equities lose their top spots to the Chinese and Russian markets although they still rack up returns of around 10%. The S&P 500 just about edges into positive territory (+1%) but struggles relative to its international peers due to a stronger dollar, weaker data and no more QE. Broadly speaking though US fixed income market returns overtake the EUR market as, in $US terms, European fixed income returns have been completely overwhelmed by the currency move with even the Bund losing almost -8% YTD in $US terms. So a fascinating year so far and one where the currency has made a significant impact on returns ensuring a wide but near equal spread of winners and losers in dollar terms.

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